A reconciliation of GAAP to non-GAAP net income and EPS is
provided in the tables that follow.

SecondQuarter

2011

SecondQuarter

2010

$ in
millions, except EPS amounts

Net

Income 2

EPS

Net

Income2

EPS

GAAP

$

2,024

$

0.65

$

752

$

0.24

Difference

926

0.30

3

1,956

0.62

3

Non-GAAP
that excludes items listed below

$

2,950

$

0.95

$

2,708

$

0.86

$ in
millions

SecondQuarter

2011

SecondQuarter

2010

Acquisition-related costs 4

$

1,440

$

1,747

Costs
related to restructuring programs

816

894

Gain on
AstraZeneca's asset option exercise

-

(443

)

Other

7

-

Net
decrease (increase) in income before taxes

2,263

2,198

Income tax
(benefit) expense 5

(1,337

)

(242

)

Decrease
(increase) in net income

$

926

$

1,956

Year-to-date results can be found in the attached financial tables.

"Double-digit growth from key products, and successful new
product launches in markets worldwide led to Merck's strong second
quarter results," said Kenneth C. Frazier, president and chief
executive officer. "We're delivering on our promise to grow both
the top and bottom lines while continuing our efforts to streamline
and transform Merck.

"By improving the effectiveness and efficiency of our operations
and focusing on scientific innovation, we are well-positioned for
sustained and profitable growth in the future."

Update to Merger Restructuring Program

Merck said today that it remains on track to achieve its goal of
$3.5 billion in annual cost synergies by the end of 2012.

The company said it will more aggressively reduce its cost
structure so Merck can continue to invest in long term profitable
growth opportunities while driving a more efficient operating
model. As a result, Merck announced the next phase of its Merger
Restructuring Program today. As part of this next phase, the
company expects to reduce its workforce, as measured at December
31, 2009, by an additional 12 to 13 percent by the end of 2015. At
the same time, Merck said it will continue to hire new employees in
strategic growth areas of the business such as emerging
markets.

"Merck is taking these difficult actions so that we can grow
profitably and continue to deliver on our mission well into the
future," said Frazier. "The environment we operate in is changing
rapidly and dramatically, and these steps will help us more
efficiently serve customers and patients around the world."

By the end of 2015, Merck now expects the overall Merger
Restructuring Program to yield annual ongoing savings of $4.0
billion to $4.6 billion from the original estimate of $2.7 billion
to $3.1 billion. Total cumulative pretax costs for the Program are
estimated to range between $5.8 billion to $6.6 billion.

The table below reflects sales of the company's top
Pharmaceutical products, as well as total sales of Animal Health
and Consumer Care products.

$ in
millions

SecondQuarter

2011

SecondQuarter

2010

Change

Total
Sales

$

12,151

$

11,346

7%

Pharmaceutical 6

10,360

9,638

7%

SINGULAIR

1,354

1,258

8%

REMICADE

842

669

26%

JANUVIA

779

600

30%

ZETIA

592

564

5%

VYTORIN

459

490

-6%

COZAAR/HYZAAR

406

485

-16%

ISENTRESS

337

267

26%

NASONEX

323

338

-4%

JANUMET

321

218

47%

GARDASIL

277

219

27%

Animal
Health

802

731

10%

Consumer
Care 6

541

544

-1%

Other
Revenues 7

448

433

3%

The combined diabetes franchise of JANUVIA/JANUMET grew 35 percent
to $1.1 billion in the second quarter of 2011.

Worldwide sales of SINGULAIR, a once-a-day oral medicine
indicated for the chronic treatment of asthma and the relief of
symptoms of allergic rhinitis, grew 8 percent from the second
quarter of 2010 to $1.4 billion, driven by Japan and the United
States.

Global sales grew 26 percent in the quarter for REMICADE, a
treatment for inflammatory diseases, due to growth in Europe,
Canada and the emerging markets, as well as increases in
gastrointestinal indications for the treatment of ulcerative
colitis and Crohn's disease. Under an agreement reached in the
second quarter, Merck has transferred exclusive marketing rights
for REMICADE and SIMPONI (golimumab) to Johnson & Johnson in
territories including Canada, Central and South America, the Middle
East, Africa and Asia Pacific, effective July 1, 2011. Merck
retains exclusive marketing rights to these products throughout
Europe, Russia and Turkey.

ISENTRESS, an HIV integrase inhibitor for use in combination
with other antiretroviral agents for the treatment of HIV-1
infection, grew 26 percent in the second quarter driven by demand
in the United States and Europe.

As expected, global sales of Merck's antihypertensive medicines
COZAAR (losartan potassium) and HYZAAR (losartan potassium and
hydrochlorothiazide) continue to decline following loss of
marketing exclusivity for these products in the United States and
in major European markets. Sales of TEMODAR (temozolomide), a
treatment for certain types of brain tumors, declined due to
generic competition in Europe.

Sales of ZOSTAVAX were $122 million in the quarter as a
significant number of backorders were filled. The company
anticipates that backorders will continue until inventory levels
are sufficient to meet market demand.

Product Performance – Animal Health

Merck Animal Health sales totaled $802 million for the second
quarter of 2011, a 10 percent increase over the same period last
year, including an 8 percent contribution from foreign exchange.
Animal Health had strong second-quarter performance across all
regions. The growth was primarily led by increased sales of new
products in cattle, companion animal and poultry. The division's
products include pharmaceutical and vaccine products for the
prevention, treatment and control of disease in all major farm and
companion animal species.

Product Performance – Consumer Care

Merck Consumer Care second-quarter global sales were comparable
to the second quarter of 2010, reflecting declines in CLARITIN due
to a weak allergy season that were partially offset by increases in
suncare. Consumer Care includes a variety of over-the-counter
medicines, as well as footcare and suncare products.

Second Quarter Expense and Other Information

The costs detailed below on a GAAP basis during the second
quarter of 2011 totaled $10.4 billion and include $2.3 billion of
acquisition-related costs and restructuring costs.

$ in
millions

Included in the expense for the period

Second
Quarter 2011

GAAP

Acquisition-Related Costs 4

Restructuring Costs

Non-GAAP 1

Materials
and production

$

4,284

$

1,344

$

109

$

2,831

Marketing
and administrative

3,525

77

23

3,425

Research
and development

1,936

19

16

1,901

Restructuring costs

668

-

668

-

Second
Quarter 2010

Materials
and production

$

4,549

$

1,662

$

224

$

2,663

Marketing
and administrative

3,175

75

-

3,100

Research
and development

2,179

-

144

2,035

Restructuring costs

526

-

526

-

The gross margin was 64.7 percent for the second quarter of 2011
and 59.9 percent for the second quarter of 2010, reflecting 12.0
and 16.6 percentage point unfavorable impacts, respectively, from
the acquisition-related costs and restructuring costs noted above.

Equity income from affiliates was $55 million in the second
quarter. Equity income from affiliates primarily includes the
AstraZeneca LP, Johnson & Johnson°Merck Consumer
Pharmaceuticals Company, and Sanofi Pasteur MSD partnerships.

Other (income) expense, net was $121 million of expense in the
second quarter of 2011 compared with $281 million of income in the
second quarter of 2010. The second quarter of 2010 reflects $443
million of income recognized upon AstraZeneca's asset option
exercise.

The GAAP tax benefit for the second quarter of 2011 primarily
reflects a net favorable impact of approximately $700 million
relating to the settlement of the company's 2002 to 2005 federal
income tax audit, as well as a favorable impact of certain foreign
and state tax rate changes that resulted in a net $230 million
reduction of deferred tax liabilities on intangibles established in
purchase accounting. The non-GAAP effective tax rate, which
excludes the impact of these items as well as acquisition-related
costs, restructuring costs, and certain other items, was 24.3
percent for the quarter.

Key Developments

New Drug Approvals

VICTRELIS (boceprevir), the company's
oral hepatitis C protease inhibitor, was approved by the U.S. Food
and Drug Administration (FDA) and in Europe by the European
Medicines Agency. The U.S. launch of VICTRELIS is underway.
Separately, the company entered into strategic agreements with
Roche to market VICTRELIS globally to physicians as part of a
triple combination therapy regimen.

The Japanese Ministry of Health, Labour
and Welfare approved three products – GARDASIL, ZOLINZA
(vorinostat), and CUBICIN (daptomycin for injection).

Other Pipeline Updates

Supplemental New Drug Applications
(sNDAs) for the cholesterol-lowering medicines VYTORIN
(ezetimibe/simvastatin) and ZETIA (ezetimibe) have been accepted
for standard review by the FDA. The sNDAs seek indications for
VYTORIN, and for ZETIA when used in combination with simvastatin,
for the prevention of major cardiovascular events in patients with
chronic kidney disease.

An sNDA for DULERA (mometasone furoate
and formoterol fumarate dihydrate) for the treatment of chronic
obstructive pulmonary disease (COPD) has been accepted for review
by the FDA. DULERA is currently indicated in the United States for
the treatment of asthma.

Merck is discontinuing the clinical
development program for telcagepant, the company's investigational
calcitonin gene-related peptide receptor antagonist for the
treatment of acute migraine. The decision is based on an assessment
of data across the clinical program, including findings from a
recently completed six-month Phase III study.

The company received a Complete
Response letter from the FDA for the extended release formulation
of JANUMET related to the resolution of pre-approval inspection
issues. Merck is responding to the questions raised by the
FDA.

Business Development

The company and China's Simcere
Pharmaceutical Group announced last week the establishment of a
joint venture that will serve China's rapidly expanding healthcare
needs by providing significantly improved access to quality
medicines in major therapeutic areas.

Merck and Hanwha Chemical Corporation
entered into an exclusive global agreement to develop and
commercialize a candidate biosimilar form of Enbrel®
(etanercept).

Earlier this week Merck announced the
acquisition of exclusive rights to develop and commercialize
the investigational intravenous formulation of vernakalant
(vernakalant i.v.) in Canada, Mexico and the United States.
The company now has secured worldwide rights to vernakalant i.v.,
which is currently approved in the EU for rapid conversion of
recent onset atrial fibrillation to sinus rhythm and has launched
in more than 10 European countries.

Financial Targets

The company raised the lower end of its 2011 non-GAAP EPS range
and is now targeting a range of $3.68 to $3.76 and a 2011 GAAP EPS
target range of $1.95 to $2.17. The 2011 non-GAAP range excludes
acquisition-related costs, costs related to restructuring programs,
the benefit of certain tax items, a charge related to the
resolution of the arbitration proceeding with Johnson &
Johnson, and certain other items.

Merck continues to expect full year 2011 revenue to grow in the
low- to mid-single digit percent range from a base of $46.0 billion
in 2010.

In addition, the company lowered the top end of its non-GAAP
R&D expense target to a range of $8.0 billion to $8.3 billion
for the full year of 2011.

The company updated its anticipated consolidated non-GAAP 2011
tax rate to a range of 23 to 24 percent.

A reconciliation of anticipated 2011 EPS as reported in
accordance with GAAP to non-GAAP EPS that excludes certain items is
provided in the table below.

$ in
millions, except EPS amounts

Full
Year 2011

GAAP
EPS

$1.95 to $2.17

Difference
3

1.73 to 1.59

Non-GAAP
EPS that excludes items listed below

$3.68 to $3.76

Acquisition-related costs 4

$5,600 to $5,250

Costs
related to restructuring programs

1,500 to 1,300

Arbitration settlement charge

500

Other
8

(127)

Net
decrease (increase) in income before taxes

7,473 to 6,923

Income tax
(benefit) expense 5

(2,109) to (1,993)

Decrease
(increase) in net income

$5,364 to $4,930

Total Employees

As of June 30, 2011, Merck had approximately 91,000 employees
worldwide.

Earnings Conference Call

Investors are invited to a live audio webcast of Merck's second
quarter earnings conference call today at 8:00 a.m. EDT by visiting
Merck's Web site,
www.merck.com/investors/events-and-presentations/home.html.
Institutional investors and analysts can participate in the call by
dialing (706) 758-9927 or (877) 381-5782. Journalists are invited
to monitor the call by dialing (706) 758-9928 or (800) 399-7917. A
replay of the call will be available starting at 11 a.m. EDT today
for approximately one week. To listen to the replay, dial (706)
645-9291 or (800) 642-1687 and enter ID No. 76798557.

About Merck

Today's Merck is a global healthcare leader working to help the
world be well. Merck is known as MSD outside the United States and
Canada. Through our prescription medicines, vaccines, biologic
therapies, and consumer care and animal health products, we work
with customers and operate in more than 140 countries to deliver
innovative health solutions. We also demonstrate our commitment to
increasing access to healthcare through far-reaching policies,
programs and partnerships. For more information, visit
www.merck.com.

Forward-Looking Statement

This news release includes “forward-looking
statements” within the meaning of the safe harbor provisions
of the United States Private Securities Litigation Reform Act of
1995. Such statements may include, but are not limited to,
statements about the benefits of the merger between Merck and
Schering-Plough, including future financial and operating results,
the combined company's plans, objectives, expectations and
intentions and other statements that are not historical facts. Such
statements are based upon the current beliefs and expectations of
Merck's management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in
the forward-looking statements.

The following factors, among others, could cause actual results
to differ from those set forth in the forward-looking statements:
the possibility that the expected synergies from the merger of
Merck and Schering-Plough will not be realized, or will not be
realized within the expected time period; the impact of
pharmaceutical industry regulation and health care legislation; the
risk that the businesses will not be integrated successfully;
disruption from the merger making it more difficult to maintain
business and operational relationships; Merck's ability to
accurately predict future market conditions; dependence on the
effectiveness of Merck's patents and other protections for
innovative products; the risk of new and changing regulation and
health policies in the U.S. and internationally and the exposure to
litigation and/or regulatory actions.

Merck undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional factors that could cause
results to differ materially from those described in the
forward-looking statements can be found in Merck's 2010 Annual
Report on Form 10-K and the company's other filings with the
Securities and Exchange Commission (SEC) available at the SEC's
Internet site (www.sec.gov).

1 Merck is providing certain 2011 and 2010 non-GAAP
information that excludes certain items because of the nature of
these items and the impact they have on the analysis of underlying
business performance and trends. Management believes that providing
this information enhances investors' understanding of the company's
performance. This information should be considered in addition to,
but not in lieu of, information prepared in accordance with GAAP.
For a description of the items, see Table 2a, including the related
footnotes, attached to this release.

2 Net income attributable to Merck & Co.,
Inc.

3 Represents the difference between calculated GAAP
EPS and calculated non-GAAP EPS which may be different than the
amount calculated by dividing the impact of the excluded items by
the weighted average